Guidelines - Europa

1 | ESMA/2013/232 Guidelines Guidelines on sound remuneration policies under the aifmd ESMA CS 60747 103 rue de Grenelle 75345 Paris Cedex 07 France Tel. +33 (0) 1 58 36 43 21 Table of Contents I. Scope _____ 4 II. Definitions _____ 4 III. Purpose _____ 6 IV. Compliance and reporting obligations _____ 6 V. Guidelines on which remuneration is covered by these Guidelines _____ 6 VI. Guidelines on how to identify the categories of staff covered by these Guidelines _____ 8 VII. Guidelines on proportionality _____ 10 Proportionality in general _____ 10 Proportionality with respect to the different characteristics of AIFMs _____ 11 Proportionality with respect of the different categories of staff _____ 12 VIII.

2 Guidelines for AIFMs being part of a group _____ 12 IX. Guidelines on the financial situation of the AIFM _____ 13 X. Guidelines on governance of remuneration _____ 13 Management body _____ 13 Design, approval and oversight of the remuneration policy _____ 13 Remuneration of members of the management body and supervisory function _____ 14 Shareholders involvement _____ 15 Review of the implementation of the remuneration policy _____ 15 Remuneration committee _____ 15 Setting up a remuneration committee _____ 15 Composition of the remuneration committee _____ 16 Role of the remuneration committee _____ 17 Process and reporting lines of the remuneration committee _____ 18 Control functions _____ 18 Roles of control functions _____ 18 Remuneration of control functions _____ 18 XI.

3 Guidelines on the general requirements on risk alignment _____ 19 The general remuneration policy, including the pension policy _____ 19 Discretionary pension benefits _____ 20 Severance pay _____ 20 Personal hedging _____ 21 XII. Guidelines on the specific requirements on risk alignment _____ 21 Fully flexible policy on variable remuneration _____ 21 Risk alignment of variable remuneration _____ 21 Risk alignment process _____ 22 Performance and risk measurement process _____ 22 Award process _____ 22 Payout process _____ 22 Common requirements for the risk alignment process _____ 23 Time horizon _____ 23 Levels of risk and performance measurement _____ 23 Quantitative and qualitative measures _____ 23 Judgemental measures _____ 23 Risk measurement _____ 24 Date.

4 ESMA/2013/ 232 3 Performance measurement _____ 24 Qualitative/Quantitative measures _____ 24 Relative/absolute and internal/external measures _____ 25 Award process _____ 26 Setting and allocation of pools _____ 26 The risk adjustment in the award process _____ 26 Quantitative ex ante risk adjustment _____ 26 Qualitative measures for ex-ante risk adjustment _____ 26 Pay-out process _____ 27 Non-deferred and deferred remuneration _____ 27 Time horizon and vesting _____ 27 Vesting point_____ 27 Proportion to be deferred _____ 27 Time span between end of accrual and vesting of deferred amount _____28 Cash vs. instruments _____28 Types of instruments _____28 Retention policy _____ 29 Minimum portion of instruments and their distribution over time _____ 29 Ex post incorporation of risk for variable remuneration _____ 30 Explicit ex-post risk adjustments _____ 30 Implicit adjustments _____ 31 Possibility of upward revisions _____ 32 Compliance of certain remuneration structures with the requirements on risk alignment of variable remuneration, award and pay-out process _____ 32 XIII.

5 Guidelines on disclosure _____ 32 External disclosure _____ 32 Specific and general requirements on disclosure _____ 32 Policy and practices _____ 33 Internal disclosure _____ 34 Annex I Correlation table Recommendation/ aifmd _____ 35 Annex II Mapping of the remuneration principles included in the aifmd _____ 36 Annex III Schematic overview of some deferral mechanisms _____ 43 4 I. Scope Who? 1. These Guidelines apply to AIFMs and competent authorities. As long as the national regimes referred to in Article 42 of the aifmd will continue to be in force, non-EU AIFMs which market to professional investors units or shares of AIFs in Member States without a passport will only be subject to Section XIII ( Guidelines on disclosure) of these Guidelines .

6 These non-EU AIFMs will be subject to the full set of remuneration provisions in these Guidelines as from the date when the national regimes referred to in Article 42 of the aifmd will be terminated and the passport regime provided for in Articles 37 to 41 of the aifmd will become the sole and mandatory regime appli-cable in all Member States, as determined by the Commission s delegated act referred to in Article 68(6) of the aifmd . 2. In accordance with Article 5 of the aifmd , for the purposes of these Guidelines , the AIFMs to which the remuneration principles apply shall be either an external manager or, where the legal form of the AIF permits internal management and where the AIF s governing body chooses not to appoint an external AIFM, the AIF itself.

7 AIFs which are not internally managed and have appointed an external AIFM are not subject to the remuneration principles established in the aifmd as well as these Guidelines . Howev-er, the remuneration principles set out in the Recommendation are relevant to those AIFs, as well as the AIFMs which can benefit from the exclusions and exemptions foreseen in Articles 2 or 3 of the aifmd , to the extent that they fall within the definition of financial undertaking provided in paragraph of the Recommendation. Annex I of these Guidelines provides for a correlation table highlighting those principles of the Recommendation which are reflected in the aifmd . What? 3. These Guidelines apply in relation to the remuneration policies and practices for AIFMs and their identi-fied staff.

8 Annex II of these Guidelines provides details on which Guidelines apply to AIFMs as a whole and which apply to their identified staff only. When? 4. These Guidelines apply from 22 July 2013, subject to the transitional provisions of the aifmd . II. Definitions Unless otherwise specified, terms used in the Directive 2011/61/EC of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/20101 ( aifmd ) and in the delegated acts adopted by the Commission according to the provisions of the aifmd have the same meaning in these Guidelines .

9 In addition, the following definitions apply for the purposes of these Guidelines : 1 :L:2011:174:0001:0073:EN:PDF. 5 Recommendation Commission Recommendation 2009/384/EC of 30 April 2009 on remuneration policies in the financial services identified staff categories of staff, including senior management, risk takers, control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the AIFM s risk profile or the risk profiles of the AIF that it manages and categories of staff of the entity(ies)

10 To which portfolio management or risk management activities have been delegated by the AIFM, whose professional activities have a material impact on the risk profiles of the AIF that the AIFM manages. control functions staff (other than senior management) responsible for risk management, compli-ance, internal audit and similar functions within an AIFM ( the CFO to the extent that he/she is responsible for the preparation of the financial statements). remuneration bracket the range of the total remuneration of each of the staff members in the senior manager and risk taker categories from the highest paid to the lowest paid in these categories.